How depreciation generates actual cash flows

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1. A futures price is currently 40. It is known that at the end of three months the price will be either 35 or 45. What is the value of a three-month European call option on the futures with a strike price of 42 if the risk-free interest rate is 7% per annum?

2. Discuss the possible effects to our BOP when international credit agencies downgrade the credit rating of the Philippines.

3. Explain in 200-300 words how depreciation generates actual cash flows for the company.

Reference no: EM131887674

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